Title
Development Agreement with Optima for Kierland Area Sewer Main Extension (Ordinance S-43814)
Description
Request to authorize the City Manager, or his designee, to enter into a development agreement with the developer Optima Kierland (Optima). Further request authorization for the City Treasurer to collect, and for the City Controller to disburse, all funds related to this item.
Report
Summary
Optima is required to install a new public sewer main to serve a proposed four-tower residential development located near Kierland Boulevard and 71st Street. Initially, the City believed the sewer main would be necessary for Optima’s third and fourth towers. Due to other development interest in the area, as well as Optima's needs, it is now necessary for the sewer main to be added for Optima’s second tower. Optima’s funding did not account for construction of this sewer with their second tower. Optima will carry the cost of the sewer main and will design and construct the needed infrastructure. When the sewer main is accepted by the City, the City will reimburse Optima in the form of a loan (not to exceed $1 million). Optima will agree to pay the City back, with interest, within three years of acceptance of the sewer main, or at the time Optima obtains the Certificate of Occupancy for its third tower, or whichever comes first.
Contract Term
Optima Kierland will have three years from the acceptance of the sewer main, or at the time it obtains a Certificate of Occupancy for its third tower, or whichever comes first, to repay the loan and interest.
Financial Impact
The City will loan Optima Kierland up to an amount not to exceed $1 million from Wastewater Revenue funds. Optima Kierland will repay the City the loan amount, with interest, over the term of the contract. Funds are available in the Water Service Department’s Capital Improvement Program budget.
Concurrence/Previous Council Action
A development agreement with Overture Kierland, the other developer, is on the July 6, 2017, Phoenix City Council formal agenda.
Location
Kierland Boulevard and 71st Street.
Department
Responsible Department
This item is submitted by Deputy City Managers Karen Peters and Paul Blue, and the Water Services and Community and Economic Development departments.